The psychology of why people want personalized products

Modern technologies, including artificial intelligence, machine learning and data analytics, make it easier to create the personalized experiences, products, services and communications that consumers desire. To create a perfect individualized experience, however, companies must first understand why people want personalization.

“Remember that a person’s name is, to that person, the sweetest and most important sound in any language,” American self-improvement expert Dale Carnegie wrote in his book How to Win Friends and Influence People. By using a person’s name whenever appropriate, Carnegie suggested, you could better influence that person’s way of thinking.

As companies use technology to personalize marketing content, services, products and experiences to individual customers’ preferences, Carnegie’s advice has become increasingly relevant. And it’s working – Econsultancy’s 2017 “Conversion Rate Optimization” report found that 93% of companies report having more success in converting prospects into customers when they personalize their marketing. But what makes personalization so effective?

“The reason is simple,” said Jeriad Zoghby, global lead for personalization at Accenture Interactive in Austin Texas. “Customers like to feel unique. They appreciate a company that recognizes and remembers them and wants to make their experience enjoyable.”

“Personalized products and experiences make us feel unique in a sea of sameness,” said Laura Bright, associate professor of communication at Texas Christian University in Fort Worth. “Brands now have so much information about their customers that they can instantly offer exactly what they want when they want it, which consumers like because it’s more convenient and time efficient. This customization and instant access to what they need also allows consumers to feel as though they’re in control.”

AN EASY LIFE

Today, however, personalization does more than stroke our egos. It also respects our time.

"PERSONALIZED PRODUCTS AND EXPERIENCES MAKE US FEEL UNIQUE IN A SEA OF SAMENESS."

The modern marketplace is awash in similar products with minor variations; reviewing all of them can be overwhelming. The more a company knows about its customers, the more precise it can be in recommending exactly what each user is likely to want.

In fact, 45% of potential customers have abandoned a website because the amount of information or number of choices was overwhelming, according to the “2018 Accenture Interactive Personalization Pulse” report. A company that knows its customers well, however, can deliver those choices that best match an individual.

“The human brain hasn’t developed to cope with the flood of information and the thousands of mini decisions we’re faced with every day,” said Liraz Margalit, an Israeli-based web psychologist and head of Behavioral Research at global experience analytics company Clicktale. While the internet is responsible for generating much of this overload, “personalization allows companies to present customers with a shortlist of search results, product recommendations or service options specifically tailored to their personal needs and preferences, so they can easily work out what’s best for them.”

Retail giant Amazon, for example, sells more than 562 million products. Its machine learning algorithms proactively display product suggestions personalized to each customer, based on everything Amazon knows about their preferences.

BALANCING CONTROL WITH SIMPLICITY

By empowering customers to pick their favorite option from a shortlist of products or services tailored to reflect their interests, brands also are answering another basic human need: the need to feel in control.

“Consumers don’t want brands to define or dictate their experience,” Accenture Interactive’s Zoghby said. “They want to feel as though they have a level of control and autonomy. Rather than predicting what customers want and forcing experiences on them, successful companies anticipate what services or products customers may like and then allow the customer to choose whether or when they want to use those services. These companies are also transparent about the data they want to collect and how it will be used to develop value-added services for customers, and they allow consumers to opt in or out of sharing information. Together, these factors ensure that customers perceive that they’re fully controlling their interactions with brands.”

THINKING LIKE A PSYCHOLOGIST

Despite recognizing that customers want experiences that make them feel important and in control, companies often struggle to develop effective personalization strategies. The fundamental challenge? Companies often fail to understand the motivations behind a customer’s actions.

“Companies mistakenly think they can predict customer behavior by analyzing data about what individuals have done in the past, assuming they will do the same in the future,” Clicktale’s Margalit said. “However, humans are intelligent, complex and emotionally driven, so their decisions are always influenced by multiple factors.

Consequently, companies should apply psychological theory alongside analytics, so they can identify how external factors combine with their customers’ different personality traits, mindsets, expectations and preferences to impact on their decision to buy (or not buy) products. Once organizations truly understand how their customers are likely to behave in any given mindset and situation, they can develop personalized experiences that will delight customers and drive sales.”

Clicktale has worked with Margalit to identify five customer mindsets: focused, mindful, explorative, disoriented and disinterested. In a physical store, a sales assistant can use a customer’s body language to determine what mindset they are in and how receptive they will be to certain personalized services. To do the same online, companies must analyze patterns in customers’ browsing habits.

“Focused customers who have already decided to buy a specific product will likely click on one product and head straight to checkout,” Margalit said. “Mindful shoppers may hover over different items on a web page for several minutes. Disoriented or explorative consumers might flit between multiple pages and several product categories, and disinterested people will leave the site quickly or abandon their basket.”

Once companies learn to recognize certain behavioral patterns, Margalit said, they can determine which type of personalized experiences individuals will find helpful in real time. “For example, they could send a personalized recommendation to an explorative or disoriented customer during the shopping process to help them make a purchase decision.”

MUTUAL BENEFITS

Personalization offers significant benefits for consumers, but it also has multiple advantages for organizations that master it.

“The better companies are at understanding why customers like personalization, the better they will be at offering customized experiences for their clientele, and the more customers will trust and embrace their services and products,” Texas Christian’s Bright said.

Humans are naturally happiest when they are recognized and valued as individuals, and when they feel safe and in control of their experiences, Margalit said.

“When companies get it right, personalization answers all of these basic human needs because it enables every customer to feel like they have their own 24/7 personal assistant who can be trusted to help them make the best possible decisions,” she said. “Once customers have experienced this type of personalized assistance from a brand, they won’t settle for anything less.”